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The advancements made in technology changed the way different industries worked. This is especially applicable even for mutual funds investment. Thanks to the internet, you no longer need to physically pay for the purpose of mutual fund investments. Instead, you have the option of paying for it through electronic means. In the early 2000s, you could pay for mutual fund investments by using the net banking feature. As smartphones entered the picture, you could install mobile applications. Apart from new ways to pay for mutual fund investments, there are other ways in which technology changed mutual fund investments. This can be seen in the form of SIP calculators.

What are SIP calculators?

Systematic investment plan calculators are online tools that permit both experienced and fresh investors to have an idea about things such as the returns that one can earn upon the mutual fund where the investment is carried through the SIP mode. This type of calculator is known for giving investors an estimate of the returns made on an investment in mutual funds. However, it is very important for you to make note of the fact that the returns provided by any of the mutual fund schemes depend upon different factors including market conditions. Also, for determining things such as the expense ratio and exit load, online SIP calculators will not offer any clarification. All they give you is a rough estimate of the amount of maturity for the monthly SIP payment.

How do these calculators work?

In a SIP calculator, you are required to enter the values. The said values that you need to enter are the required investment amount, investment duration, the frequency in which you want to invest in the mutual fund scheme, and the returns you expect on the mutual fund investment. This is the formula that’s used to calculate the SIP plan:

FV = P x ({[ 1+ i ] ^ n-1 } x (1+i)

Here’s how the formula can be explained. The FV stands for future value, i.e., the amount you are expecting to earn upon maturity. P is the amount that you are going to invest in the mutual fund scheme. The i is the periodical rate of interest and the n is the total sum paid by you to date.

The SIP calculator has specifically been designed based on the formula used to calculate compounding interest. The interest earned through the feature of compounding is known to power the returns through mutual fund schemes.

What are the benefits of SIP calculators?

Here are the advantages of SIP calculators:

• These calculators are known for computing accurate results:

It is very imperative for you to be accurate while taking calculated risks with your investments. The SIP calculator can help you with that. All that’s required to do is enter basic details such as your monthly SIP investment amount, the expected rate of return, and your investment horizon. The SIP calculator will display things like the total sum you invested, total maturity amount, i.e., (both total investment and assumed interest earned), and assumed interest earned.